Question
3. Presented below is pension information related to Woods, Inc. for the year 2015: Service cost $82,000 Interest on projected benefit obligation 54,000 Interest on
3. Presented below is pension information related to Woods, Inc. for the year 2015:
Service cost $82,000
Interest on projected benefit obligation 54,000
Interest on vested benefits 24,000
Amortization of prior service cost due to increase in benefits 12,000
Expected return on plan assets 18,000
The amount of pension expense to be reported for 2015 is
a. $118,000.
b. $154,000.
c. $172,000.
d. $130,000.
4. Rathke, Inc. has a defined-benefit pension plan covering its 50 employees. Rathke agrees to amend its pension benefits. As a result, the projected benefit obligation increased by $2,400,000. Rathke determined that all its employees are expected to receive benefits under the plan over the next 5 years. In addition, 20% are expected to retire or quit each year. Assuming that Rathke uses the years-of-service method of amortization for prior service cost, the amount reported as amortization of prior service cost in year one after the amendment is
a. $480,000.
b. $800,000.
c. $240,000.
d. $640,000.
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